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Economy in Brief

German Consumer Climate Steadies While Economic Expectations Dive
by Robert Brusca  October 25, 2011

In Germany consumer climate crawled a bit higher in an early read on November but has mostly stay around the current level for several months. Climate crested early in the year, it since moved lower and has moved sideways. Economic expectations have moved much more sharply (see chart). Economic expectations peaked ahead of climate then dived and were still falling sharply as climate itself peaked.

Economic expectations have continued to plunge in recent months as the situation in Europe has remained up for grabs but overall climate in Germany has remained surprisingly steady.

The table also shows consumer evaluations in France, Italy and the UK. Whereas Germans rate their climate in the top 75% of its historic queue (% count), in Italy consumers evaluate it as being in the bottom 2.1%, in France in the bottom 9.7% in the UK in the bottom 12%. Germany is head-and-shoulders better off that these select EU member countries, at least according to how consumers say they feel.

In Germany the economic expectation is weak in the 34th percentile of its ranked queue of values, but income expectations are still strong as income expectations hover and continue to climb to the top 9% of their historic queue. German propensity to buy stands strong in the 77th percentile of its queue, within the top 25%, historically.

On balance Germany is still doing so much better than the rest of Europe. But Germany is not impervious to what is going on in the Zone. Since July the Germany Climate has been more or less steady while Italy has moved down sharply. France has moved down and the UK is sporting a deeply negative reading that is up-to-date only through September.

The troubles in the Zone are making things worse, and even though Germans are aware of the events and have been protesting many of the measures, not wanting to backstop the troubles elsewhere, elsewhere the economic situation is deteriorating fast. Germany is being sucked into this vortex with the economic climate rating taking the worst hit and the rest of it to follow if conditions in Europe continue to worsen. In the end the Greek Bone is connected to the Berlin Bone and there is no way around it. German consumers will not stay aloof if the mess in Europe is not cleaned up soon.

Germany Consumer Climate Survey GFK Other EU Members
  Climate Expectations Propensity to Consumer/Household Confidence
    Economic Income Buy Italy:ISAE France:Insee UK:GFK
Nov-11 5.3 -- -- -- -- -- --
Oct-11 5.2 -6.2 36.5 31.2 92.9 82.0 --
Sep-11 5.2 4.8 35.1 29.7 94.2 80.0 -30.0
Aug-11 5.3 13.4 27.6 36.9 96.4 83.0 -31.0
Jul-11 5.4 44.6 34.6 34.1 99.9 85.0 -30.0
  Current Lagged One Month   2Mo Lag
Average 4.6 11.1 5.3 7.6 100.4 90.2 -14.4
Max 9.1 69.5 45.2 64.4 108.1 107.0 1.0
Min 1.5 -32.9 -20.5 -41.7 91.1 77.0 -39.0
% Range 50.0% 26.1% 86.8% 68.7% 10.6% 16.7% 22.5%
Count% 73.4% 34.0% 91.5% 77.7% 2.1% 9.7% 14.0%
% range is current reading as a percentile of Hi/Low range  
Count % is current reading ranked as a %-tile among all readings  
GFK survey dates from January 2002  
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